E5-49. (Learning Objective 3: Preparing and using a cash budget) Dexter Dunne, the chief financial officer, is responsible for The Furniture Mart’s cash budget for 20X6. The budget will help Dunne determine the amount of long-term borrowing needed to end the year with a cash balance of

$160,000. Dunne’s assistants have assembled budget data for 20X6, which the computer printed in alphabetical order. Not all the data items reproduced below are used in preparing the cash budget.

Requirements 1. Prepare the cash budget of The Furniture Mart, Inc.
2. Compute The Furniture Mart’s budgeted current ratio at December 31, 20X6. Based on the current ratio and on the cash budget, would you lend $100,000 to The Furniture Mart? Give the reason for your decision.

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(Assumed Data) Actual cash balance, December 31, 20X5 Budgeted total assets (In thousands) $ 150 24,377 Budgeted total current assets. 7,769 Budgeted total current liabilities 4,620 Budgeted total liabilities. 12,088 Budgeted total shareholders' equity. 12,289 Collections from customers. 22,100 Dividend payments 371 Issuance of shares... 647 Net income........ 1,183 Payment of long-term and short-term debt. 984 Payment of operating expenses 2,438 Purchases of inventory items. 14,655 Purchase of property and equipment. 1,257